Friday, September 2, 2011

Natural gas prices to rise on news of revised estimates

Government corrected amount of gas field

Washington – Natural gas leases will trade at a much higher price following a government announcement.

Energy analysts are predicting a massive upsurge in natural gas prices due to a revised Energy Department estimate of “undeveloped technically recoverable” reserves.

Energy Information Agency specialists calculated the Marcellus shale field, situated in the northeast U.S., to have 410 trillion cubic feet of natural gas available for recovery through fracturing techniques developed in the Bakken gas fields and proven in the Eagle Ford fields of South Texas.

The Marcellus formation is by far the biggest shale deposit in the U.S.

The nation uses about 22 trillion cubic feet per year, so the original estimate showed a potential of 18 years of supply.

But last week, the U.S. Geological Survey downsized the estimate by 326 trillion cubic feet – 80% less - thus declaring the Marcellus to hold only 84 trillion cubic feet – a decreased estimate of 15 years of supply.

At current rates of consumption, the U.S. has about a 60 year supply of natural gas, according to EIA estimates.

Following the release of the new U.S. Geological Survey study, Energy Department officials said, “”We're going to be taking this number (84 trillion cubic feet) and using it in our model.”

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